Price Elasticity of Demand

Price Elasticity of Demand

Price elasticity of the Demand measures the extent of the responsiveness of quantity required to the change in cost.

The formula for measuring the price elasticity is as follows: -

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Types of Elasticity are as follows

a) Perfectly Inelastic Demand (ED = 0)

The quantity demanded remains the unchanged regardless of the changes in cost levels.

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b) Perfectly Elastic Demand 2458_Price Elasticity7.png

An endless amount could be bought at the particular price.

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c) Elastic Demand 1808_Price Elasticity8.png

Demand is elastic when the change in price leads to the more than proportionate change in the quantity demanded.

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d) Inelastic Demand  1900_Price Elasticity9.png

Demand is inelastic when the change in price leads to a less than proportionate alteration in quantity demanded.

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e) Unitary Elastic Demand  (ED = 1)

Demand is unitary elastic when the change in cost leads to a proportionate change in the quantity demanded.

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